8.1 bn WB loan to continue

NEW DELHI, May 15: Following the Japanese decision to disallow the annual Aid India consortium meet in Tokyo next month, the World Bank may ...

NEW DELHI, May 15: Following the Japanese decision to disallow the annual Aid India consortium meet in Tokyo next month, the World Bank may relocate the meeting to Paris. Paris is is the usual venue for the meeting, but it was changed to Japan at the specific request of the Japanese government.

Irrespective of what happens at the Aid India meet 8211; if the US is able to muster 50.1 per cent of the votes in the Bank8217;s Board, this will stop fresh loans to India 8211; the World Bank will still continue to disburse around 8.1 billion undisbursed loans on projects which have already been cleared. These projects have already been cleared by the Board and disbursements cannot be stopped as it is a legal contract between the Bank and the Government of India and the agency getting the loan.

This was stated at a meeting at the Indian Women8217;s Press Corps by the Bank8217;s country director, Ed Lim. In response to a question on vote shares of various countries, he said the US share was 16.7 per cent, Japan 8 per cent, Germany4.6 per cent and France and the UK have 4.4 per cent each.

In case the US is able to get enough votes to stop aid to India it will slash loans of around 3 billion roughly the amount that the Bank would have sanctioned. The actual disbursement of loans, of course, would be much lower. While Lim did not give any estimate, generally, the Bank disburses around 5 per cent of the loan amount in the first year.

In other words, assuming that the Aid India meet does not take place, or the US manages to stop loans to India this year, the actual loss of inflows this year will be around 150 million. Lim said that currently loans of 450 m for Powergrid, 130 m for IREDA, 275 m for the Haryana Highway project and 130 m for a diversified agriculture project in Uttar Pradesh.

While explaining the new lending instruments of the Bank, he said that the Bank had approved, in principle, of a loan of 600 m for the restructuring of the power sector in Haryana. Under the adaptable lending programme, the full amountof 600 m would be disbursed if the Haryana power sector was restructured along the lines discussed between the Bank and the Haryana government.

Each time, however, a separate project would have to be formulated and cleared by the Board. In the Haryana case, 60 million has been disbursed, and the remainder would therefore have to be cleared by the Board.

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The Bank has extended about 186 loans and 273 developmental credits to India, totalling approximately 19.6 billion and 23.4 billion, respectively, from 1949 to April 1998.

The major World bank project portfolio comprises various sectors including education 11 per cent, agriculture 10 per cent, irrigation 11 per cent, water supply amp; sanitation 4 per cent, power 23 per cent, oil, gas amp; urban 10 per cent, transport amp; telecom 9 per cent, industry amp; finance 8 per cent and population, health amp; nutrition accounting for 14 per cent.

The bank is developing new lending instruments and services including the Adaptable Program Loan APL which providesgreater flexibility in Bank projects. In January 98, the bank approved the first of a series of adaptable program loans of up to 600 million over a period of 8-10 years to help the state of Haryana to restructure its power sector. A number of projects unde prepartion will also make use of this new lending instrument.

Meanwhile, the bank has decided to provided greater country focus to operations, improve supervision and deliver better services to clients, the bank has shifted more resources, relocated work and devolved authority to country offices.